Purchasing an existing business

Discussion in 'Lawn Mowing' started by bleabold, Aug 10, 2004.

  1. bleabold

    bleabold LawnSite Member
    Posts: 19

    Good morning everyone:

    I found someone interested in selling an existing lawn care business. The terms of sale include all equipment required to operate the business: truck / 12' trailer /61" zero turn rider / 48" walk behind / two push mowers / trimmers & blowers. Along with 40 contracts. The customers are 60% residential and 40% commercial.

    The asking price is upwards of 60k dollars. Average weekly income is over $1,500 pre week.

    I would like feedback from everyone as to if this seems to good to be true, or am I just lucky to find this deal?

    Is this a worth while deal that I should jump on?
  2. ikesleeping

    ikesleeping LawnSite Member
    Posts: 46

    It grosses $78,000.00 and change? What kind of truck and trailer and equipment, year ,condition,make etc. What kind of track record does the biz have? What tunover is experienced? There are some very knowlegeable people here and they will probably want, need these answers to help.
  3. bleabold

    bleabold LawnSite Member
    Posts: 19

    Yearly income is based on 30 cuts per year. Truck is a 94 F-250. I have not seen the equipment personally. This guy has been in business for over 15 years. Majority of customers have been with him for over 10 years.

    I have an appointment this evening to look at the equipment and go over financial records.
  4. chevyman1

    chevyman1 LawnSite Senior Member
    Posts: 852

    All that means is that 60 accounts are going to be open game soon. the ONLY way it's worth it is if the equipment is relatively new and ALL of the customers sign non-compete letters.
  5. Black95gt

    Black95gt LawnSite Member
    Posts: 56

    It sounds like a good deal, but you have to be carefull. The equipment could be worn down or possibly defective, and the existing 40 contracts may drop you since they were paying for the previous owners service. But they all might keep you and you might get more customers and then it turns out to be a good deal. But it does sound like maybe to much money for all the equipment involved. Equipment should only be about $25,000 - $30,000, so you would be paying $30,000 for the accounts and whatever else is established.
  6. scott's turf

    scott's turf LawnSite Senior Member
    from NH
    Posts: 949

    After you get all the customers to sign make sure you get the previous owner to sign it too :D
  7. mastercare

    mastercare LawnSite Senior Member
    Posts: 289

    I have a LITTLE experience with this on a smaller scale. I had a company in college, and sold my accounts to my old boss when I graduated.....little did I know that someday I'd be cutting again and want them back!! But, that's behind us.

    Here's what we did. I came up with an asking price for my entire customer list, no equipment, company shirts, logos, marketing, etc.....only customer list. I had very good retention rates..... but he was unsure of whether the customer was buying my quality work, me personally, or a combination. So, here's the agreement we came up with.

    Together we wrote a letter to all of my customers telling them that I was moving into a new careeer and I'd arranged for another company (good friend.....former employer, all that good stuff) to take over their service to ensure a smooth transition...etc.etc.

    Here's the deal....I recieved half the money up front, and the remaining half was paid to me at a percentage of my customers which he retained. I didn't get all of them, becuase his prices were higher, but got about 60-70% of them. So, that works about to about 85% of what I asked for the customer list. It was fair to him (less risk) and fair to me, knowing that most of my customers would take my recommendation to use this company.

    I would purchaase hte customer list in the same way, especially if you're not going to "run" his company, but rather take them on as customers in your existing company. If you do the customer's list this way, then you can add the value of the equipment and come up with a fair price, that will vary based on your retention.

    Hope this is helpful.
  8. bleabold

    bleabold LawnSite Member
    Posts: 19

    Thanks Dan,

    He and I are on a similar page as you stated. I apreciate the constructive comments and insite.
  9. bleabold

    bleabold LawnSite Member
    Posts: 19

    I am really surprised that 112 people read this thread and I only got a handful of replies. Any and all feedback is greatly appreciated.
  10. DennisF

    DennisF LawnSite Bronze Member
    from Florida
    Posts: 1,381

    I would have a professional appraisal done on the equipment to find out its true value. When you buy out an existing lawn care business the only thing that you can be absolutely sure of keeping is the equipment. I wouldn't give him more than 2 months income from the existing customers since there is no guarantee that any of them will remain with you. After all, they signed a contract with him...not you. They could easily cancel and leave you high and dry. The asking amount on the total package seems quite high to me. With 60K to invest you could buy brand new gear and build your own business slowly over the course of a season or two. That's how I did it... and for a lot less money than 60K.

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